Late last month further positive U.S. economic news was released. According to Reuters, employment conditions continued to improve in almost all states in April, providing further evidence that the U.S Labor Department data released in mid-May.is continuing to recover from the longest and deepest recession in the past 70-plus years. This information is based on
Could it be that we are finally moving from a so-called “jobless” recovery to a recovery that is beginning to add jobs? According to Reuters:
“Only eight U.S. states had unemployment rates in the double-digits in April. That was less than half the 18 states with jobless rates of 10 percent or higher just a year before. In almost all states (46 to be exact) the unemployment rates in April 2011 were lower than in April 2010. Unemployment rates fell in 39 states in April from higher levels posted in March.” (emphasis added)
It appears that we may have hit an inflection point in terms of unemployment rates in many states in April. Reuters also indicated that over the month, payrolls grew in 42 states and the District of Columbia. New York gained the most jobs, 45,700, followed by Texas, 32,900, and Pennsylvania, 23,700. Although preliminary data is showing that job growth is slowed in May, the April data is still a nice piece of economic news.
When you think about it, I am amazed that the economy has progressed as far as it has given how deep the recession was. Keep in mind that employment is considered a lagging economic indicator. This means that employment growth usually occurs two to three quarters after the official end of a typical recession. With the length and depth of this past recession, one that by any measure was far worse than any on record except for the Great Depression in the 1930s, it is no wonder that it has taken so long for employment to begin recovering.
I think that collectively as a nation, our expectations about how fast the country would recover from this recession were unrealistic. It is vital that we keep some perspective about just how bad this one was, which officially ended in June of 2009.
According to the Minneapolis Fed, the 10 previous postwar recessions ranged in length from six months to 16 months, averaging about 10-and-a-half months. The 2007-09 recession was the longest recession in the postwar period, at 18 months. So this recession was 70% LONGER than the historical average.
Think about that. Is there any wonder why it is taking so long for many parts of the country to “feel” like it’s really over? If you want to see additional comparisons that the Fed has made between this recession and others, use this link to go to the Fed’s research website.
The reality is recovery is occurring. It is simply taking far longer than anyone was hoping. The good news is that with data showing employment improving in nearly every state over the past year, it really looks like we are starting to turn the corner.
Because of this, if you own a middle-market business and have survived the worst recession on record, you should congratulate yourself for keeping the business alive. Now you have to ask yourself, do I want to risk going through that again? Do I really want nearly 100% my personal net worth tied up in an illiquid asset?
Obviously you knew the risks associated with entrepreneurship when you founded your business long ago. However, has your perspective on risk vs. reward shifted a bit after what you have been through since 2007?
With many of you approaching your retirement years, the current window that this recovery provides will give you the best opportunity in years to find a buyer, cash out, and retire. And given the baby-boomer business owner retirement explosion expected over the next five to 10 years, postponing your Supply and Demand: The Baby Boomer Impact on M&A for further details.until “things get better” really doesn’t make financial sense – see
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